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Riding The Jetstream

Jetstream Wireless, a new entrant in the Wi-Fi hotspot lottery, is nothing if not ambitious.

"Our goal," says company president Arun Sondhi, "is to be among the top five hotspot players in North America by the second quarter of 2003."

Well, let's see, we already have iPass, GRIC, Wayport, T-Mobile, Boingo, Airpath... Jetstream, based just slightly off the beaten track in Chippewa Falls, WI, may have a long, bumpy flight ahead to meet its objective.

The company so far has about 10 confirmed hotspots, including: a Holiday Inn in Eau Claire, WI, just east of Minneapolis-St. Paul; other hotels managed by the same local company, Larson Management; the Chippewa Valley Regional Airport; two other airports yet to be announced; and the Eau Claire Convention Center.

Sondhi says Jetstream expects to have 60 sites by the end of this year and 300 by the second quarter of 2003. While it currently has just 20 hotspot subscribers, he predicts it will have 2,000 within six months.

Jetstream doesn't expect to reach these goals all by itself. Like other grassroots hotspot companies, it's smart enough to realize that, at least for the foreseeable future, it will need to co-operate as much as compete with other players. In fact, Jetstream already has a roaming agreement in place with Airpath.

"This industry is not at the stage where operators can be competing against each other too much," Sondhi says. "There is a certain education level or awareness level that has to be reached first among hotspot owners and subscribers. But since this is a sunrise industry, there is ample opportunity for several hotspot network operators to thrive."

Jetstream is at least not a raw start-up. It's a joint venture between two seasoned companies that may at first seem strange bedfellows, but could end up complementing each other nicely:

Network Innovations, also of Chippewa Falls, is a regional communications company that operates several ISPs, provides a variety of other Internet services, including turnkey outsourcing of back-office functions for ISPs and WISPs and resale of AT&T and Qwest Internet access. Heartland Aviation of Eau Claire is a small regional airline that has other travel-related business interests and is also involved in airport management.

The team now running Jetstream comes mostly from Network Innovations. It originally came together three or four years ago at Intellicom, a SoftNet Systems subsidiary that provided two-way satellite Internet services. SoftNet was also a partner in SoftNet Zone, which in turn operated the Laptop Lane network of airport PC-and-Internet-access kiosks before they were acquired by Wayport.

"We've been researching this market for a few years," Sondhi says. "What we've found is that there's a lot of frustration among property owners because of their inability to provide the highspeed access services their patrons are demanding. It requires a very expensive wired or wireless network, and the solutions available involve a steep learning curve for them. We identified an opportunity there early on."

Heartland Aviation, Sondhi says, "brings vast experience in several related verticals, it brings important contacts -- and it brings capital to the table."

The two joint-venture partners provided all the start-up funding for Jetstream. The company is now courting venture capital and angel financing, but Sondhi insists it can execute the current business plan -- 300 hotspot sites by mid-next year -- even without additional funding.

Jetstream is pursuing its ambitious goals on several fronts. It developed and manufactures the Jetserver, a hotspot server that includes Internet gateway, AAA (authentication, authorization and accounting) and firewall functionality. The Jetserver can be placed at the hotspot site itself and/or at a local hub site serving several hotspots.

The server is at the heart of a turnkey hotspot solution Jetstream is offering site owners and WISPs. The company sells directly to large hotspot owners such as the hotels and airports. It's also beating the bushes looking for WISP and other reseller partners to market to smaller sites. It already has "a few" such partners, including in Florida and the Pacific Northwest -- though Sondhi won't name them.

The bundle of services on offer also includes necessary back-office functions, such as roaming integration, billing and customer relationship management. These will be provided by Network Innovations using its existing infrastructure and software.

The package includes a dial-up roaming network provided by Network Innovations and its affiliates. So Jetstream subscribers will be able to access the Internet even when they're not in range of a Wi-Fi hotspot.

Jetstream can also offer calling-card long distance services, which it hopes will help make it appear a "one-stop" communications shop for business travelers -- and prospective hotspot partners. The next version of the Jetstream solution will also include integration of mobile telephony.

As well as building its own subscriber base, the company is pursuing roaming partnerships with other hotspot network providers. Airpath is the first. GRIC, Wayport and iPass, which Sondhi sees as eventually being competitors, are for now targets for partnership deals. Boingo is not a target -- Sondhi feels that company is missing the boat by not courting hotel sites with in-room coverage. Nor does he consider Boingo a potential competitor.

Jetstream has no one consistent model for dealing with hotspot owners. It negotiates with each separately, Sondhi says. In the case of the hotels, it typically operates a pilot project in a few rooms and public areas first, then proposes a deal in which the hotel buys equipment, Jetstream provides support, the two companies share broadband access costs -- and share revenues.

"The hotels," Sondhi notes, "are hesitant to agree to a monthly fixed commission. They're more comfortable with sharing revenues. 'If you make money, we make money.' That's part of the business plan."

With the airports, on the other hand, presumably because they're key to building the subscriber base, Jetstream is prepared to bear more of the technology and broadband access costs, Sondhi says.

The Jetstream strategy has a few new wrinkles -- the range of bundled services for hotspot owners, the Jetserver. Yet it's hard to see how it's different enough to catapult this company into the front ranks of hotspot network operators.

Sondhi predicts Jetstream will break even in as little as 18 months. As he says, Wi-Fi hotspot networking is a "sunrise" industry. It's a new day dawning. Anything is possible -- even a company from the remote Midwest out-distancing established and well-financed rivals.